Wednesday, 20 January 2016

Volatility cooling in the afternoon

With equities breaking a new multi-year low of sp'1812, the VIX finally showed some upside kick (intra high 32.07), but then saw very significant afternoon cooling, settling +5.9% @ 27.59. Near term outlook is uncertain, as there is clear threat that sp'1812 is a short term low.





*I've included the bigger weekly cycle, to help put things in perspective. The 30s are kinda high.. but its nothing relative to the capitulation (53.29) as seen Aug'24th.

The two most recent weekly candles are somewhat spiky.. and threatening the equity bears with a short term floor from sp'1812.

Broadly.. VIX 40s look an easy target.. but perhaps not this cycle.

So.. what to make of today?

First, we saw VIX 32s.. which certainly confirmed the new multi-year lows seen across most equity indexes. Yet, VIX then cooled over 5pts to 26.59, before a minor rebound in the closing minutes.

Frankly.. its not a great close for those long the VIX. There is clearly still threat of renewed equity downside - not least from further weakness in Oil, but still.. VIX may have well maxed out in the 32s today.

*I launched a VIX-long trade (via TVIX) in the 2pm hour, but bailed a mere 45 minutes later as the equity recovery turned somewhat hyper bullish.

more later... on the indexes